Say no to bailouts but yes to taxpayer backed loans? 

President Obama at his speech in Schenectady, NY paused to reflect on the financial reforms he signed into law to “protect consumers” and “put an end to taxpayer bailouts.” While he might have stopped taxpayer bailouts, he has no problem with putting taxpayer money on the line in the form of taxpayer funded or  guaranteed loans to private companies.

 The Export-Import Bank is not really a bank. It’s is government agency that finances American exports. The financing comes in two forms: either as direct loans to foreign buyers (companies or governments) under condition that they buy American goods, or as guarantees to private banks that are lending to foreign buyers of U.S. goods. Either way, taxpayers bear the risk. As of 2006 Congress had authorized the agency to lend, guarantee, and insure up to $100 billion -- meaning at any given time the taxpayer could be liable for that amount.

The chief recipients of these loans are Boeing (on whose board Obama’s new chief of staff Bill Daley held a seat) and GE (whose CEO Jeffery Immelt was just tapped as chairman of Obama's new Council on Jobs and Competitiveness). Boeing alone makes up well over half the loans and guarantees that Ex-Im gives out, and 64 percent of their dollar value in 2007. The current chair of the President's Export Council, James McNerney, is also the current CEO of Boeing after working for GE for 19 years.

 The Obama administration hasn’t had any problem with trying to entice other nations to take advantage of Export-Import either. They’ve gone out of their way using ambassadors and envoys to push for the sale of Boeing, with Export-Import used as a way to finance the deal.

 The President might be correct in some sense that he has “put an end to taxpayer bailouts,” but he still has no problem with putting taxpayers on the hook for private companies to profit. It’s not quite the same as bailing out a company, but if a deal goes bad, taxpayers still have “bail out” the bad loan.

 

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Staff Report

Staff Report

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A daily newspaper covering San Francisco, San Mateo County and serving Alameda, Marin and Santa Clara counties.
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